PA man gets 5 years in prison for $13 million mortgage fraud

The owner of a mortgage company scammed lenders out of millions, using the proceeds to buy luxury homes, expensive cars, even a yacht

By Ryan Smith

05 Aug 2018

A Pennsylvania man is headed to federal prison for five years for scamming mortgage lenders out of nearly $13 million.

George Barnard, 47, pleaded guilty to multiple counts of fraud, according to the US Attorney’s Office for the Eastern District of Pennsylvania. In addition to his prison sentence, Barnard was ordered to pay restitution of $12,774,941.89 and forfeit $4,262,279.38 in proceeds from the fraud.

According to authorities, between 2005 and 2013, Barnard – one of the two owners of Capital Financial Mortgage Corporation (CFMC) and the owner of several title companies – scammed banks out of almost $13 million. Instead of using the money to fund mortgage loans for borrowers or pay off borrowers’ existing mortgages, Barnard took the money for himself, using it to by yachts, luxury cars, and multimillion-dollar beach homes. Barnard even used the ill-gotten money to pay the salary of a yacht captain, according to the US Attorney’s Office.

“The defendant’s life of luxury came at the expense of those he defrauded,” said US Attorney William M. McSwain. “This was a sophisticated scheme that went on for almost a decade. The defendant will no longer need his personal yacht captain while he spends the next five years in a federal prison.”

Barnard scammed numerous lenders, according to the US Attorney’s Office – lenders who loaned money to CFMC, lenders who bought mortgages written by CFMC, and lenders who loaned Barnard himself millions of dollars he used to fund his luxury lifestyle. In addition to scamming lenders, Barnard defrauded the IRS by filing “blatantly false” tax returns that failed to declare millions of dollars in income, the US Attorney’s Office said. Barnard also harmed more than two dozen individual borrowers who went to CMFC for refinances and suddenly found their homes encumbered with two mortgages – after Barnard failed to pay off their existing mortgages and sold their new mortgages to other lenders.